The Electric Commentary

Wednesday, February 23, 2005

Canada, Part Two

Now that I've recovered from my aforementioned magical journey to the Land of Curling, I'd like to get into some actual topics.

On Canadian finances:

They views here seem to be normal, meaning the complete opposite of the views held by the current U.S. government. This article explains the situation rather well and even gives some some practical examples that my help GWB understand what it all means.

Canada had a budget surplus of $9 billion (CAD, obviously) in 2004, and I've found that there is a lively debate regarding this year's proposed budget. Canada is the only G-7 nation to run in the black for the last seven years in a row. So what did the crazy Canucks DO with all that extra money? They plowed it into the national debt, working to achieve the government's stated goal of bringing the debt as a percentage of GDP down to 25% (in 2004, the U.S debt equaled 62% of GDP). Crazy. And what do they propose to do with the extra cash THIS year? Why, the same thing of course. Although the Finance Minister is proposing to raise the personal income tax exemption, which would effectively negate the income tax liability of 800,000 low-income families. WHAT THE HELL IS GOING ON HERE?! No reduction in capital gains taxes? No restructuring of the higher tax brackets? Although taxes here are higher here than in the U.S., Canadian citizens generally seem to accept that burden as the price they must pay to achieve their goals as a country. Basically, Canada is acting like a responsible person, paying down the debt and ensuring that federal programs are funded as promised. Now I know that nations are not people, but debt can threaten the safety and stability of a nation, just as it can a normal person.

Frankly, I think the U.S. could take some pointers. Certainly, there are elements of Canadian society that I don't agree with and that run counter to our national personality. However, the basic idea of developing programs the country sees as worthwhile and then actually sacking up and helping to properly fund said programs, all while maintaining a sustainable financial position, is the Right Way to operate. Instead we spend carelessly, pile up a huge national debt and watch it grow (this site is pretty cool). And while we're at it, we actually omit large chunks of future expenditures from our budget. (The main line of reasoning I've heard: "But we don't know how much it will cost..." To this I say, "No sh*t. I don't know how much I'll have to spend on car repairs this year, but when my car breaks down I damn well better have some money set aside to get it fixed." Even an estimate with future adjustments is better than nothing.)

My dad, who is not Canadian, once told me (after I'd done a horrible job of mowing the lawn) that I can't go through life acting as if someone is going to come along behind me to fix things up. That's good advice. The Canadians seem to get it. It'll take some work, but I think we can get there.

Oh, and GWB... go out and mow that lawn AGAIN.

5 Comments:

  • I would just like to say that capital gains taxes are evil because they discourage savings, and tax money that has already been taxed (often twice).

    I would also like to point out that Jason's dad makes a strong case for partial social security privatization.

    Just sayin'.

    By Blogger PaulNoonan, at 10:47 AM  

  • Paul, I agree with you on the capital gains tax issue, I should've picked a better example to illustrate my point (which I'm sure you understood).

    My dad is, in fact, a STRONG opponent of social security privatization. Seems hypocritical, but when we talked about it, he made a good point: it sounds like a good idea to use personal accounts or some other form of privatization to create this "ownership society" IF (1)the government has the political will to keep people from borrowing against their personal Soc. Security accounts in the future (which it absolutely will not, since that is the logical extension, just as happens now with 401k accounts), and (2)The people of this country have the collective will to hold the line on federal aid programs for those who make poor financial decisions (which we won't, because that runs counter to our country's values).

    By Blogger Jason, at 11:17 AM  

  • I'm only on board for partial privatization, if it's compulsory, can not be borrowed against, along with raising the retirement age.

    By Blogger PaulNoonan, at 2:23 PM  

  • "I would just like to say that capital gains taxes are evil because they discourage savings, and tax money that has already been taxed (often twice)."

    I would just like to say that I like capital gains taxes because they can prevent a permanent monied aritocracy whose children may have never contributed to society in any way yet live comfortably.

    By Blogger RyanSimatic, at 4:43 PM  

  • In that case I assume you're in favor of repealing the inheritance tax, as preventing aristocratic savings is the goal of said tax, and having two such taxes in place would be terribly inefficient.

    It's cliched to say this but more than half of the country owns stock, so hitting capital gains really does hurt middle class and poor people too, whereas the inheritance tax just hits rich people (I'd expand the exemption for small businesses, although I realize this may create shelter opportunities, I think that the good would outweigh the bad).

    By Blogger PaulNoonan, at 7:51 AM  

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